Figures showing a
steeper-than-expected drop in manufacturing output today fuelled fears
that the UK is facing a renewed slump this quarter.

The grim news today followed data yesterday that confirmed we are selling less to our foreign trading partners despite hopes of an 'export led recovery'.

The Office for National Statistics
(ONS) said factory output fell 1.3 per cent in October, far worse than
the 0.2 per cent decline that analysts had been expecting.

The wider measure of industrial
production fell 0.8 per cent, reflecting a record fall in oil extraction
although this was partly due to maintenance on North Sea rigs.

Making do: The fall in factory output was far worse than had been expected.

The decline adds to the recent flow
of disappointing numbers for the UK economy at the start of the fourth
quarter and bodes ill for GDP after a rise of 1 per cent in the autumn
ended the longest double-dip recession since the 1950s.

Exports are more than 10 per cent
lower over the year to some major European countries including Germany,
Italy, Spain, Belgium and Luxembourg. However, exports to China are 7.6
per cent higher than a year ago.

They
were up 6.3 per cent to the United States and 65.1 per cent to South
Korea. The ONS noted ‘a shift in the pattern of the UK’s trade’ – with
exporters becoming far less reliant on the troubled eurozone for
business.

Markit chief economist Chris
Williamson said: 'Judging by the official data that we have seen for the
fourth quarter so far, notably retail sales, trade and industrial
production, the UK will struggle to avoid a renewed downturn in the
economy after the brief return to growth seen in the third quarter.'

The Office for Budget Responsibility
this week slashed growth forecasts for the next five years and predicted
a borrowing bill some £84billion higher than its last estimate.

Mr Williamson added: 'While a dip
back into contraction may prove mild and short lived, the concern is
that any new downturn will not only put further pressure on the UK's AAA
credit rating but also provide a further set-back to a much needed
improvement in business and consumer confidence.'